The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) quashed excise duty demand as barred by limitation on making of payment through Profit and Loss Account ( PLA ).
The appeal was directed against the impugned order passed by the Commissioner of Central Excise & Customs, Jammu, whereby the Commissioner has confirmed the demand of Rs.41,71,424/- of erroneously availed refund under Section 11A of the Central Excise Act along with interest under Section 11AB of the Central Excise Act and also imposed equivalent penalty under Section 11AC of the Central Excise Act; however, the learned Commissioner has dropped the demand of Rs.45,72,156/- under Rule 14 of the Cenvat Credit Rules, 2004 read with proviso to Section 11A of the Central Excise Act and also did not impose the penalty under Rule 15(2) of the Cenvat Credit Rules, 2004.
It was the allegation of the Department that non-availment of Cenvat Credit resulted into excess payment of Central Excise duty through PLA and consequently availment of excess erroneous refund by the appellant which appeared recoverable from them under the proviso to Section 11A of the Central Excise Act read with the provisions of the said Notification along with interest under Section 11AB of the Central Excise Act as the appellant had suppressed the facts of non-availment of Cenvat Credit on furnace oil from the Department by giving false statements in their monthly refund claims that they had utilized whole of Cenvat Credit available with them at the end of the month.
The counsel for the appellant submitted that the Commissioner ought to have understood that as there was no Cenvat Credit balance, as it was not availed, the appellant had to pay the duty in cash and thus availed the option of refund of such paid duty in PLA. The Commissioner also ought to understand that had been balance, why the appellant would use the working capital and pay the duty in PLA if the credit was available, however, this was not considered by the Commissioner, failing which the demand is proposed to be recovered on the ground of erroneously sanctioned refund.
It was further submitted that the show cause notice dated 28.10.2010 is barred by limitation for the period November 2005 to March 2009 on the ground of suppression of facts, but the learned Commissioner has erred to acknowledge that the suppression of facts must be coupled with the intention to evade payment of duty and that in the present case, the Revenue has failed to prove suppression of facts with intent to claim inadmissible refund.
A Two-Member Bench comprising SS Garg, Judicial Member and P Anjani Kumar, Technical Member observed that “We find that the refund was sanctioned under the Notification for the period from November 2005 to March 2009, whereas show cause notice for demand was served in the month of October, 2010 by invoking the extended period of limitation alleging suppression of facts with intent to claim inadmissible refund. We are unable to understand that how in the facts of the present case, suppression can be alleged.”
“If the appellant could have availed Cenvat Credit on inputs i.e. furnace oil, then, they would not have paid more duty in cash and would have claimed refund of lesser amount, whereas, in fact in this case, the appellant have paid the duty in cash/through PLA and thereafter claimed refund and hence, entire transaction is revenue neutral and therefore, extended period is not invokable in the present case. Accordingly, we hold that the demand is barred by limitation” the Bench noted.
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